GoKawiilWith large gains in life expectancy, the population share of disability due to cognitive decline and dementia has substantially increased. Many older adults in the United States leave the workforce well before age 65. Correlational evidence suggests that leaving the workforce before retirement age could accelerate the pace of cognitive decline. We offer causal evidence, using HRS data for the United States, exploiting plausibly exogenous shifts in labor demand in local labor markets as a Bartik instrument for employment variation across these markets. We find substantial declines over time in cognitive scores stemming from negative labor demand shocks. These findings are concentrated among men aged 51 to 64, whose employment decisions and outcomes may be more sensitive to local labor market conditions than are these decisions or outcomes for women or for older men. Our evidence extends past work focusing narrowly on the retirement age window and provides further support to the notion that working to older ages may delay age-related cognitive decline.
Does Employment Slow Cognitive Decline? Evidence from Labor Market Shocks
Why This Matters
This study highlights the importance of continued employment in delaying cognitive decline among older adults, emphasizing potential benefits for individual health and economic productivity. It underscores the need for policies that support extended workforce participation, especially in regions experiencing labor demand shocks. For consumers, it signals the value of staying engaged in work or other cognitively stimulating activities as they age.
Key Takeaways
- Employment can delay cognitive decline in older adults.
- Labor market conditions influence older adults' cognitive health.
- Supporting extended workforce participation may improve aging outcomes.
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